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Lawmakers might opt to pass a law on slowing down the pace of AI. If this happens, expect a dangerous preemptive acceleration. An AI Insider analysis and scoop.

Duolingo’s latest quartergave investors fresh evidence that user growth is accelerating, but one Wall Street firm still sees a problem with what the market is paying for the language-learning company.Duolingo (DUOL) reported second-quarter revenueof $298.5 million, up 18% from a year earlier, while total bookings rose 8% to $289.1 million. Daily active users increased 23% to 58.7 million, and paid subscribers rose 17% to 12.7 million.The company also reaffirmed its full-year targets for 10% to 12% bookings growth and 15% to 18% revenue growth, while raising its adjusted EBITDA margin outlook to about 26.5%.Those results arrived one day after Bank of America took a more cautious view of the stock.In a note given to TheStreet, BofA analyst Omar Dessouky downgraded Duolingo to Underperform from Neutral and cut his price objective to $93 from $103. Based on the $135.80 share price listed in the note, that target implied roughly 31.5% downside.

Duolingo (DUOL) reported second-quarter revenue of $298.5 million, up 18% from a year earlier, while total bookings rose 8% to $289.1 million.Cheng Xin via Getty Images

BofA questions what is behind Duolingo’s user growthDessouky’s concern centered on whether Duolingo can sustain the growth needed to support its valuation.The analyst said the stock had rallied more than 20% since early June alongside an improvement in monthly active users. June MAUs rose about 6% from May, following 3% growth in May and a 2% decline in April, according to the note.BofA argued that the June acceleration did not appear to be driven by major product improvements. The firm instead pointed to a June promotion tied to Airbnb that offered users a free month of Super Duolingo without requiring a credit card.Duolingo’s earnings report added another wrinkle to that argument.More EarningsBlock, Inc. Q2 2026 Earnings: Recap of $XYZ Earnings Call, ForecastWalt Disney Co. Q3 2026 Earnings: Recap of $DIS Earnings Call, ForecastPalantir Technologies Inc. Q2 2026 Earnings Call: Recap of $PLTR Earnings & OutlookManagement said Q2 user growth accelerated because of product changes, marketing, and a one-time Streak Revival event. The June campaign allowed eligible users to restore their longest-ever streak by completing three lessons, and 15.4 million learners participated. Nearly 8 million of them did not have an active streak when the event began.That disclosure gives some support to BofA’s broader concern that part of June’s acceleration came from a temporary event, although Duolingo pointed to a different one-time factor than the analyst did.The company also said its current-user retention rate reached an all-time high of 84%, up about one percentage point from a year earlier. Management expects DAU growth to remain above 20% for the rest of 2026, arguing that product improvements and marketing should provide more durable support.Duolingo’s valuation remains the bigger issue for BofAThe firm said Duolingo was trading at roughly 16 times its 2027 EBITDA estimate, compared with about 10 times for a group of mid-cap subscription companies with similar expected EBITDA growth. Dessouky said that premium was difficult to justify without more confidence in Duolingo’s longer-term product-market fit.BofA cut its 2027 bookings growth forecast to 9% from 11% and lowered its 2027 EBITDA estimate to $338 million from $388 million.The analyst had expected second-quarter bookings to reach $294 million, above the $284 million Street estimate and company guidance cited in the note. Duolingo ultimately reported $289.1 million, still above that comparison point but below BofA’s forecast.Management guided to $307 million of bookings in the third quarter, representing about 8.9% year-over-year growth. That figure is nearly identical to BofA’s $307 million estimate.The disagreement becomes more pronounced further out.Duolingo has been expanding AI-powered learning features such as Video Call and has laid out a longer-term vision for a more conversational learning experience. BofA said it is not yet willing to assume those changes will produce the growth required to justify today’s premium valuation.For investors, the latest earnings report strengthened the near-term user-growth story. BofA’s downgrade argues that the harder question begins after that.Related: Duolingo CEO issues stark forecast for 2026

TheStreet aims to feature only the best products and services. If you buy something via one of our links, we may earn a commission.Why we love this dealFall may be around the corner, but rest assured, patio season is far from over, especially since many people are still experiencing summer temperatures. Now is actually the perfect time to upgrade your patio while tons of outdoor furniture is marked down to new low prices.Amazon’s sale includes the Best Choice Products 3-Piece Conversation Bistro Set, which is on sale for only $120. You can save $20 on this popular patio set on the market, and better yet, it’s eligible for free, one-day shipping, depending on your location. That means you could be relaxing comfortably on your deck with a cold beverage in hand just in time for the weekend.Best Choice Products 3-Piece Conversation Bistro Set, $120 (was $140) at Amazon

Courtesy of Amazon

Shop at AmazonDetails to knowThis three-piece set includes two wicker armchairs with removable cushions and a matching wicker side table with a tempered glass top. The table also features an additional storage shelf for displaying decor or stowing away magazines, card games, or blankets. It’s the perfect setup for any outdoor space big or small since it doesn’t take up a ton of room. It’s made of all-weather wicker to withstand the elements and is held together by durable steel frames to increase longevity. Although the set is made for outdoor use, it’s still recommended to move it inside or use covers to keep the pieces in pristine condition throughout the off-season.Related: Walmart’s 3-seat patio swing glider with an adjustable canopy is now 44% offWhy do shoppers love it?The patio set is loved by more than 3,900 shoppers who have rated it five stars and said it was “stylish and comfortable.””You cannot beat the price,” one reviewer wrote. “The finished look is great. This is a very sturdy set and is comfortable even for big people. We use it every day. I expect it to last a long time.”Don’t miss your chance to score Best Choice Products 3-Piece Conversation Bistro Set on sale for only $120. That equals $40 apiece, which is a steal for any type of furniture. 

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